Wednesday, December 30, 2009

Taxing Credulity

Just when most Americans-or at least the "working families" who toil away on behalf of the government-are getting fed up feeding the pig, along comes Professor Matthew Dallek in this morning's NY Daily News to instruct us that we need to get over our aversion to being taxed: "Americans have not always hated taxes. The marginal tax rate was approximately 90% for the wealthiest Americans during World War II, but 85% to 90% of the public still described their tax rate as fair. In the mid-20th century, new payroll taxes were enacted to help pay for Social Security andMedicare, while federal taxes helped fund the Interstate Highway System, strengthened research and education at America's premier public universities and built the world's most powerful military."

It's as if Dallek hasn't been awake and aware for the past decade as NY City and NY State have borrowed us into an unsustainable debt-as Nicole Gelinaspoints out in the NY Post this morning. Or as more and more middle class Americans and small business owners have been forced to fork over more and more of their income in order to maintain-not vital services or infrastructure improvement-but a bloated state bureaucracy.

As Gelinas tells us: "It would be one thing if the debt had paid for what it should have: gleaming infrastructure to support productivity and growth. Do you see much of that? This week, New York state had to blow up an 80-year-old bridge to Vermont before it fell down. Its destruction and an 18-month replacement project were unplanned. Albany, responsible for maintenance, had scheduled an inspection for next year. But a state worker fortuitously discovered catastrophic cracks."

It's as if Dallek hasn't even noticed that we're in the middle of an economic recession-an economic downturn that will most certainly be exacerbated if we start to try to tax our way out of it. Yet, that's what it appears the federal government-and NY State as well-are trying to do. As the Tax Foundation points out: "Paterson/Silver Budget Will Make New York’s Taxes Worst in Country."

And still New York bridges are falling down. Gelinas again: "The nearly 60-year-old TappanZee Bridge is awaiting a $16 billion replacement, too. Let's hope we don't have to take down the existing bridge before we get around to building the new one."

Did Dallek miss the tea parties this summer? As Randy Bachman once sang: "You ain't seen nothing yet!" The country is already running an even more calamitous national debt than the localities and we have a majority party doubling down on this bad bet-looking to create a federal health oversight bureaucracy that is so tax dependent that (even the NY Times' Bob Herbert can see it clearly) it will stifle both economic growth and personal liberty.

So when Dallek says we must overcome our "allergy" to taxes, he uses a poor medical analogy-since if were only an allergy than it would be a rather simple problem to address. But it's much more than that-it has become a justifiably pathological aversion whose etiology can be found in the, "government can solve all of our problems philosophy" that, if it isn't stopped, will suffocate the entrepreneurial spirit that Dallek has little to say about.

Instead, he prefers to live in an economic bubble that is insulated from the reality of most working Americans who desperately want political leaders who will rein in the high cost of government-and the boondoggle bureaucracies that fail to get even a passing mention in Dallek's ode to high tax heaven.

But at least he's honest, if misguided: "Taxes are no magic solution to all that ails America. But if the United States is going to eliminate record red ink, expand health care coverage to millions, rebuild aging airports and roads, fight in Afghanistan and invest in scientific and medical research, then we must all be willing to pay more.The status quo, comforting though it may seem to some, is a road map to an economically feebler America."

Now we have a national administration that is moving us right in the direction that Dallek feels it is necessary for us to go in-if we want to avoid "enfeeblement." Somehow, we believe that 2010 will be seen as a harsh rejoinder to Dallek's tax and spend epistle-and those elected officials who heed his counsel will be looking for work-perhaps at the Bipartisan Policy Center where he himself happily toils, blithely insulated from both economic and political reality.